Hon’ble Supreme court in the case of B.P.L. Limited Vs. CCE held that the benefit of exemption notification is available only when the conditions of notification are strictly met by the assessee and no benefit can be allowed by taking liberal view of any condition. Thus, the benefit of notifications no.8/96 and 4/97 cannot be claimed as the apparatus is not ordinarily usable internally and so usable only with the optional accessories. But the scope of notification cover only apparatus and not accessories, hence exemption not available.

Facts of the case:

The assessee is a manufacturer of Defibrillators. It classify the Defibrillators under C.E.T. heading 9018 and claimed exemption under Notification No.8/96 dated 23.09.1996 and Notification No.4/97 dated 01.03.97 respectively.

The department not satisfied with the classification made by the assessee and thus, disallowed the exemption and also issued show cause notice demanding duty and equivalent penalty.

As per the notification the exemption is allowed for D.C. Defibrillators for internal use and pacemakers.

The point of dispute is that whether the Defibrillators manufactured by the assessee fits into the Defibrillators mentioned in the notification no. 8/96 sand 4/97.

The tribunal decided the case in the favour of department by holding that DC Defibrillators manufactured by the assessee is mostly for external use and internal use is possible only when defibrillator is used with paddles which is an optional accessory available with the defibrillator manufactured by the assessee. Thus, the scope of exemption cannot be extended to include the defibrillator manufactured by the assessee as the same without optional accessory not usable internally.

Contention of the Assessee:

Defibrillator was capable of internal use when it used with paddlers (accessories) on the exposed hear during open heart surgery. Further, the term ‘for use’ used in the notification not only means actual use but also include capable of being used. Thus, the internal use which is not so common would even qualify the Defibrillator as usable internally, and therefore it is eligible for exemption.

Contention of the Revenue:

Defibrillators manufactured by the assessee were designed to provide external counter shock whereas the apparatus for which nil rate of duty had been prescribed was for defibrillators meant for internal use only. Further, the benefit of the exemption notification was available only to implantable defibrillators coupled with pace makers.

Held by Hon’ble Supreme Court:

It is not disputed by the appellant that their Defibrillators are primarily meant for external use. However, in rare cases the same can be used internally as well at the time of carrying out the open heart surgery.

The internal use require the paddlers (an optional accessory) to deliver the electrical shocks.

But, while selling the defibrillators said paddlers are not sold as an integral component/accessory of the main equipment. It means that purchase of paddlers is optional which clearly indicate that the same is manufactured with intention to target the customers using the same externally only.

Thus, the apparatus manufactured by the assessee is primarily meant for external use, simply because it can be used internally as well but not without the paddles and paddle is optional accessory, it is not right to hold that conditions contained in the exemption Notifications are satisfied.

The court relied on its decision in the case of Rajasthan Spinning and Weaving Mills wherein it held that exemption notification must be strictly construed and the assessee should bring himself squarely within the ambit of the notification. No extended meaning can be given to the exempted item to enlarge the scope of exemption granted by the notification.

On the basis of above exemption court upheld the order of tribunal disallowing exemption benefit.